Blog Archives

U.S. Indicts Turkey’s Halkbank for Illegal Transfer of Billions of Dollars to Iran

By Harut Sassounian

Halkbank, whose majority shareholder is the Turkish government, pleaded not guilty in New York on March 31, 2020, to criminal charges that it helped Iran illicitly transfer tens of billions in dollars and gold, wrote Aykan Erdemir and Philip Kowalski in an essay published on April 3 by the Foundation for Defense of Democracies, a policy institute based in Washington, D.C.

On October 15, 2019, the Federal Southern District Court of New York accused Halkbank of “fraud, money-laundering and sanctions offenses,” alleging that Halkbank and its executives aided Iranian-Turkish gold trader Reza Zarrab in a “multi-billion dollar scheme to circumvent U.S. sanctions on Iran.”

Initially, Halkbank refused to appear in court “claiming that the criminal charges are beyond the U.S. court’s jurisdiction,” Erdemir and Kowalski wrote. However, when “prosecutors proposed escalating contempt fines which could have totaled $1.8 billion after eight weeks,” the bank agreed to respond to the court charges.

Originally, the Turkish and Iranian officials had concocted a scheme to exchange gas for gold to circumvent the U.S. sanctions, by claiming that the gold was headed not to Iranian government entities but to Iran’s “private sector.” Erdemir and Kowalski stated that “the scheme ultimately yielded the Iranian regime some $13 billion in Turkish gold between 2012 and 2013. Once the U.S. Congress introduced legislation to close the ‘golden loophole’ in 2013, Iran used Turkish front companies to issue invoices for fake transactions of food and medicine that fall under the humanitarian exception to U.S. sanctions. In one infamous case of over-invoicing, a Turkey-based luxury yacht company used Halkbank to sell nearly 5.2 tons of brown sugar to Iran’s Bank Pasargad at the price of approximately $240 per pound.”

This scheme was first exposed in December 2013 by Turkish investigators who implicated then Prime Minister Recep Tayyip Erdogan, several of his ministers and other senior officials, including Halkbank’s managers. Erdogan shut down the probe by firing the police officials, prosecutors and judges!

The scandal resurfaced in March 2016 when Iranian-Turkish ring-leader Reza Zarrab was arrested in Miami after he flew to Florida to visit Disney World with his family.

In March 2017, U.S. authorities arrested Halkbank Deputy CEO Mehmet Hakan Atilla upon his arrival in New York. Zarrab pleaded guilty and agreed to testify in court against Atilla. Zarrab confessed that he had bribed senior Turkish ministers and top Halkbank executives. He even implicated Erdogan in the corruption scheme, stating that Erdogan had personally approved the illegal actions.

“Halkbank’s Atilla received a 32-month prison sentence in May 2018, a significantly shorter one than prosecutors had originally sought,” according to Erdemir and Kowalsky. “After Atilla’s return to Turkey, Erdogan rewarded the convicted sanctions buster by appointing him CEO of the Istanbul stock exchange, following the president’s established pattern of rewarding other senior accomplices of Zarrab with cushy appointments.”

Erdogan personally appealed to Pres. Trump and other senior officials to block the court case of Halkbank, claiming that US courts have no right to try Turkish citizens. The Courthouse News Service reported that “One of Zarrab’s shell companies, Royal Holding A.S., listed its address as a 35th floor unit in Trump Towers Istanbul. Before pleading guilty to money laundering, sanctions evasions and bribery, Zarrab retained Trump’s personal attorney Rudy Giuliani to lead a campaign of shadow diplomacy that echoed the one in Ukraine. Shuttling between Turkey’s capital of Ankara and the White House, Giuliani met with Erdogan, Trump, former Secretary of State Rex Tillerson, and other senior U.S. and Turkish officials in an attempt to negotiate a prisoner swap. The New York Times reported that Tillerson resisted the White House pressure for a deal that would have effectively killed the Zarrab case.”

Erdogan’s and Giuliani’s efforts succeeded in stalling the prosecution for almost two years, but ultimately failed when the U.S. Attorney’s Office for the Southern District of New York went forward with the charges last October.”

Senator Ron Wyden, the Senate Finance Committee’s top Democrat, told Courthouse News Service: “It sure looked like Donald Trump was doing the bidding of Erdogan and Giuliani, and there were real questions about whether this was about getting Halkbank off the hook, even though there were allegations that they were orchestrating the largest sanctions evasion scheme in history.”

During President Trump’s Senate impeachment inquiry earlier in 2020, Senators Wyden, Robert Menendez and Sherrod Brown asked a joint question which was read aloud in the Senate by Chief Justice John Roberts: “Has the president engaged in a pattern of conduct in which he places his personal and political interests on top of the national security interests of the United States?”

Wyden told Courthouse News Service: “Donald Trump has significant financial interest in Turkey,” referring to Trump Towers Istanbul. “We read regularly that his family has forged personal relationships with important Turkish officials. And so, you have to ask — which is what is part of our inquiry — whether the Trump policy toward Turkey is in a significant way colored by his personal and political interests and not the national security of the country.” If Halkbank is found guilty of violating U.S. sanctions, the court could impose a hefty penalty, regardless of Tump’s wishes.

Rudy Guiliani Visits Armenia, Says “Armenian Genocide should not be forgotten”

Guiliani Armenia 2

Rudy Giuliani lays a wreath at the Tsitsernakaberd Armenian Genocide Memorial and Museum-Institute in Yerevan, Armenia’s capital (October 22, 2018).

On his first trip to Armenia, former New York City Mayor and personal lawyer to U.S. President Donald Trump, Rudy Guiliani visited the Tsitsernakaberd Armenian Genocide Memorial and Museum-Institute in Yerevan, Armenia’s capital, on October 22, ARMENPRESS first reported.

After touring the museum, Giuliani laid flowers at the memorial and planted a symbolic tree in the park in honor of Armenian Genocide victims.

He also signed the guestbook at the memorial.

“The Armenian Genocide should not be forgotten because to do so is to make possible similar horrific acts of terror in our era and in the future,” Giuliani wrote. “The recognition of this Genocide will help prevent such inhumanities in the future. God bless the souls of all who died and may they rest in peace with God.”

Giuliani Armenia 5

Rudy Guliani visits the Tsitsernakaberd Armenian Genocide Memorial and Museum-Institute in Yerevan, Armenia’s capital ( October 22, 2018).

Speaking to reporters about possible U.S. recognition of the Armenian Genocide, he said that the genocide is a historical fact, but “I am not here in my capacity as a private lawyer to President Trump. I am here as a private citizen. It’s up to the [Trump] administration to make their own conclusion,” Giuliani said.

In his first two years as President, Donald Trump has issued statements that echo former President Barack Obama and those before him that have sidestepped the issue in order to appease Turkey, a NATO ally.

Giuliani was also asked about the expansion of U.S.-Armenia relations. “It’s up to the two governments,” he said. U.S. National Security Advisor John Bolton is currently in Moscow and will travel to Yerevan later this week.

As the Mayor of New York City at the time of the September 11, 2001 terrorist attack, Rudy Giuliani, who owns a home in Palm Beach, FL, is a former Republican presidential candidate, and a public figure well known to Armenian Americans, tens of thousands of whom call New York City, and Palm Beach County, home. In fact, several Armenian Americans were among those killed on 9/11.

“I’m here as a private citizen, just to learn some facts in my first time in Armenia. I know the Armenian community in America very well,” he said.

Rudy Giuliani was invited to Armenia to participate in the Eurasian Forum by Ara Abrahamyan, the UNESCO Goodwill Ambassador and President of the Union of Armenians of Russia who is close to Russian President Vladimir Putin.

Giuliania Armenia 3

Rudy Giuliani meeting with Davit Tonoyan at the Armenian Ministry of Defense (October 22, 2018).

During his trip, Giuliani visited Armenia’s Minister of Defense and met with Davit Tonoyan, acting Defense Minister of Armenia. Tonoyan and Giuliani discussed the current security environment in Armenia and the South Caucasus. They exchanged views on a number of regional and international issues.

Over the last two decades, U.S. engagement in the South Caucasus has been sparse, allowing Russia to strengthen it’s grip. However, the low flame of U.S.-Armenia relations has found new fuel since Armenia’s ‘Velvet Revolution’ earlier this year. The latest color revolution to hit the former Soviet space, hundreds of thousands of people descended onto the streets of the capital to demand the resignation of Serzh Sargsyan, Armenia’s President-turned-Prime Minister (the Armenian Constitution was amended by the President’s ruling party in 2015, thus transferring greater power to the Prime Ministerial post as Sargsyan’s Presidential term was coming to an end).

The largest citizen assembly since the country declared its independence in 1991 worked, and Sargsyan stepped aside without a single shot being fired. The peaceful revolution symbolized a clear rejection of the Putin style of authoritarian democracy that has expanded in the region (see Azerbaijan, Turkey) and across the globe.

During the Eurasia Forum, Armenia’s new Prime Minister Nikol Pashinyan commented on the recent and upcoming visits of senior U.S. officials and ties between to the two countries. “Unfortunately, as for the U.S. our contacts were not so intensive until now.” On October 15, U.S. Deputy Assistant Secretary of State George Kent visited Armenia and met with Pashinyan. U.S. National Security Advisor John Bolton is expected later this week.

“We are going to intensify our relations,” Pashinyan said.